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 Message Boards » » paying for day care pre-tax? Page [1]  
Novicane
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I was talking with a guy at work and he mentioned I could pay for day care expenses pre-tax?

I'm on track to pay about 15k in day care this year (2017)

2018 will be even more, over 20k with two in it.

What are some financial advantageous things I can do?

12/28/2017 6:59:11 AM

DonMega
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Check to see if your work has a dependent care FSA. You can put money in the account tax free, but it is only $5k at my work (and I know one of my friends is also limited to $5k). It is use it or lose it.

There is also a childcare tax credit (not deduction). Turbotax figured out how much I could claim on this with my FSA and expenses last year. https://turbotax.intuit.com/tax-tips/family/the-ins-and-outs-of-the-child-and-dependent-care-tax-credit/L2H7rzUWc

[Edited on December 28, 2017 at 9:31 AM. Reason : link]

12/28/2017 9:31:18 AM

jbrick83
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I think it's something like $3,000 per kid. We were going to do it this year, but were rushed and budgeting pretty hard at the time...so just said fuck it. We'll probably do it this coming year. Oh...and:

http://lmgtfy.com/?q=pre+tax+deductions+child+care

12/28/2017 10:32:46 AM

scotieb24
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I did this this year for the first time. I could be wrong but I think the $5000 limit is set by the tax rules and not your company.

Basically every paycheck (twice a month) I have $208 go into my Childcare HRA account pre-tax. Then I submit proof of payment for childcare and I get reimbursed the $208. I did the math one time and I think it equated to clearing something like $120 more per month. In the end it should all equal (Not considering interest) whether you get credit now or at the end of the year. This allows you to have the money now instead of in a lump sum at the end of the year. Someone correct me if I am wrong.

This may just be for my company's options: What I did is once I had a few months of daycare bill records I filed a claim for as much as I had records for even though I didn't have the funds in my HRA yet. This way, every time the pre-tax dollars hit the HRA account I get reimbursed for that amount without having to file new records.

[Edited on December 28, 2017 at 2:24 PM. Reason : .]

12/28/2017 2:23:57 PM

Novicane
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Quote :
" I did the math one time and I think it equated to clearing something like $120 more per month. In the end it should all equal (Not considering interest) whether you get credit now or at the end of the year. This allows you to have the money now instead of in a lump sum at the end of the year. Someone correct me if I am wrong."


this is what i assume as well. Daycare gave us what we paid for EOY last year and gave it to our tax guy.

12/28/2017 3:09:54 PM

darkone
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I pay my nanny this way (partially). Note that the limit is per household and not per person. My wife puts the max in her dependent FSA which means I can't also do the same through my job.

12/29/2017 4:05:07 PM

afripino
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we're using a 529 to pay for private preschool federal tax-deferred

#ThanksTrump

[Edited on January 23, 2018 at 11:46 AM. Reason : ]

1/23/2018 11:43:48 AM

wahoowa
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^ I thought new 529 availability was only kindergarten or above? Where did you find guidance that Pre-K is eligible?

1/23/2018 3:14:50 PM

afripino
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^nvm. accountant called me up and said "after further review" he was wrong and we can't apply it to pre-K. only K-12.

would've been nice.

1/24/2018 9:14:36 AM

Wolfey
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I believe federal law is $5k for Dependent Care FSA not sure if its per child or not. But it lowers your taxable income since it is deducted pre-tax. It ended up saving us a good bit because the money was never figured into our take home pay.

1/24/2018 10:56:41 AM

afripino
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I'm looking into that now. Do you just enroll through your employer?

1/24/2018 3:47:44 PM

Darb5000
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Yeah, you'd enroll through them similarly to how you can assign money to a Flex Spending Account for medical care. I think you can only do this during open enrollment or if you have a qualifying event, like the birth of a child. You couldn't decide to do it mid-year because you just found out about it, for instance.

My company had a debit card for the account, so I could just swipe at daycare rather than having to request reimbursement or whatever.

[Edited on January 24, 2018 at 4:57 PM. Reason : ]

1/24/2018 4:55:52 PM

afripino
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found out from HR we don't have it. oh wells....

1/24/2018 5:11:04 PM

Darb5000
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Bummer

1/25/2018 1:27:55 PM

wahoowa
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$5K total per filing. So if you and your wife file separately you can both get the $5K credit, or if you file jointly then only $5K total. Doesnt matter number of kids. That credit literally lasts 2 months for us.

1/25/2018 2:45:06 PM

rjrumfel
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I have taken full advantage of a dependent care FSA every year. It is wonderful, however the max allowable is outdated, and has been capped at 5k for a decade I think. They really need to up it.

1/25/2018 2:49:24 PM

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